COLUMBIA SPORTSWEAR COMPANY
CHANGE IN CONTROL SEVERANCE PLAN
This change in
control severance plan is established by Columbia Sportswear
Company, an Oregon corporation (the “Company”), to
enable the Company to offer a form of income protection to its
eligible employees in the event their employment with the Company
is involuntarily terminated other than for Cause. The Plan is also
intended to secure for the benefit of the Company the services of
the eligible employees in the event of a potential or actual Change
in Control without concern for whether such employees might be
hindered in discharging their duties by the personal uncertainties
and risks associated with a Change in Control, by affording such
employees the opportunity to protect the share value they have
helped create as of the date of any Change in Control and offering
income protection to such employees in the event their employment
terminates involuntarily or for Good Reason in connection with a
Change in Control.
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1.
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Purpose, Establishment and
Applicability of Plan .
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1.1
Establishment of Plan . As of the Effective Date, the
Company hereby establishes its Change in Control Severance Plan
(the “Plan”), as set forth in this document.
1.2
Applicability of Plan . Subject to the terms of this Plan,
the benefits provided by this Plan shall be available to all those
Employees who, on or after the Effective Date, receive a Notice of
Participation, pursuant to Section 3 herein.
1.3 Contractual
Right to Benefits . This Plan and the Notice of Participation
establish and vest in each Participant a contractual right to the
benefits to which he or she is entitled pursuant to the terms and
conditions thereof, enforceable by the Participant against the
Company.
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2.
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Definitions and
Construction .
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Whenever used in this Plan,
the following terms shall have the meanings set forth
below.
2.1
Administrator . “Administrator” shall mean the
Board of Directors of the Company, or its committee or designee, as
shall be responsible for administering this Plan.
2.2 Base
Salary . “Base Salary” shall mean an amount equal
to the sum of the Participant’s gross annual base salary,
exclusive of bonuses, other incentive pay, commissions and all
other pay or expense types, as in effect immediately preceding the
Termination Event.
2.3 Board .
“Board” shall mean the Board of Directors of the
Company.
2.4 Cause .
“Cause” shall mean (i) any act of personal
dishonesty taken by the Participant in connection with his or her
responsibilities as an Employee and intended to result in
substantial personal enrichment of the Participant, (ii) the
Participant’s conviction of a felony that is injurious to the
Company, (iii) a willful act by the Participant that
constitutes gross misconduct and that is injurious to the Company,
(iv) continued substantial violations by the
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— Columbia Sportswear Company Change in Control Severance
Plan
Participant of
the Participant’s employment duties that are demonstrably
willful and deliberate on the Participant’s part after there
has been delivered to the Participant a written demand for
performance from the Company that specifically sets forth the
factual basis for the Company’s belief that the Participant
has not substantially performed his duties or (v) any act that
would constitute a material violation of the standards set forth in
this Plan, including, without limitation, the standards of
Section 6.
2.5 Change in
Control . “Change in Control” shall mean the
occurrence of any of the following events.
(a) Any
“person” (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) becomes
the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the total
voting power represented by the Company’s then outstanding
voting securities, provided, however, that the following
acquisitions shall not constitute a Change in Control: (i) any
acquisition directly from the Company, other than an acquisition by
virtue of the exercise of a conversion privilege where the security
being so converted was not acquired directly from the Company by
the party exercising the conversion privilege, (ii) any
acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
the Company, (iv) an acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act pursuant to a transaction
that meets the conditions of clauses (i), (ii) and
(iii) set forth in subsection (b) below, or (v) any
acquisition approved by the Board; or
(b) The
consummation of a merger or consolidation of the Company with any
other corporation or of the sale or disposition by the Company of
all or substantially all of the Company’s assets, excluding,
however, in each case, a transaction pursuant to which
(i) the
individuals, entities or groups (within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act)
who are the beneficial owners of the total voting power represented
by the voting securities of the Company immediately prior to such
transaction will beneficially own, directly or indirectly, at least
50% of the outstanding shares of common stock, and the combined
voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, of the Company or such
surviving entity after the transaction in substantially the same
proportions as their ownership, immediately prior to such
transaction, of the total voting power represented by the voting
securities of the Company;
(ii) no
individual, entity or group (within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act
(other than the Company, any employee benefit plan (or related
trust) of the Company or the surviving entity) will beneficially
own, directly or indirectly, 50% or more of, respectively, the
total voting power represented by the voting securities of the
Company or the surviving entity unless such ownership
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— Columbia Sportswear Company Change in Control Severance
Plan
resulted solely
from ownership of securities of the Company prior to such
transaction; and
(iii) individuals
who were members of the Incumbent Board will immediately after the
consummation of the Company Transaction constitute at least a
majority of the members of the board of directors of the Company or
the surviving entity after the transaction.
2.6 Code .
“Code” shall mean the Internal Revenue Code of 1986, as
amended.
2.7 Company
. “Company” shall mean Columbia Sportswear Company, any
subsidiary corporations, any successor entities as provided in
Section 8 hereof, and any parent or subsidiaries of such
successor entities.
2.8
Company-Paid Coverage . “Company-Paid Coverage”
shall mean the benefits coverage described in Section 4
hereof.
2.9
Disability . “Disability” shall mean that the
Participant has been unable to perform his or her duties as an
Employee as the result of incapacity due to physical or mental
illness, loss of legal capacity or any other cause beyond the
Employee’s control (unless the Employee is granted a leave of
absence by the Board) as determined by a physician selected by the
Company and acceptable to the Employee, for a period or periods
aggregating twelve (12) weeks in any three hundred sixty-five
(365) day period.
2.10 Effective
Date . “Effective Date” for purposes of this Plan
shall mean February 1, 2009.
2.11
Employee . “Employee” shall mean an employee of
the Company.
2.12 ERISA
. “ERISA” shall mean the Employee Retirement Income
Security Act of 1974, as amended.
2.13 Good
Reason . “Good Reason” shall mean any of the
following that occur without the Participant’s express
written consent and that the Company fails to cure within the time
frame specified in Section 12.3: (i) the material
reduction of the Participant’s authority, duties or
responsibilities relative to the Participant’s authority,
duties or responsibilities in effect immediately prior to such
reduction; provided, however, that a significant reduction in
authority, duties or responsibilities solely by virtue of the
Company being acquired and made part of a larger entity (as for
example, when the Chief Financial Officer of Columbia Sportswear
Company remains as such following a Change in Control and is not
made the Chief Financial Officer of the acquiring corporation)
shall not constitute Good Reason; (ii) a material reduction by
the Company in the Participant’s annual base salary relative
to the Participant’s annual base salary in effect immediately
prior to such reduction, other than as part of a general decrease
in the annual base salaries of all similarly ranked executives of
the Company; or (iii) a change in Participant’s
geographic work location of over seventy-five (75) miles from
the Participant’s geographic work location immediately prior
to such change, except for required travel in furtherance of the
Company’s business to the extent consistent with the
Participant’s duties.
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— Columbia Sportswear Company Change in Control Severance
Plan
2.14
Participant . “Participant” shall mean each of
the Tier I Participants and the Tier II Participants.
2.15 Notice of
Participation . “Notice of Participation” shall
mean an individualized written notice of participation in this Plan
from an authorized officer of the Company.
2.16 Plan .
“Plan” shall mean the Columbia Sportswear Company
Change in Control Severance Plan, as set forth herein, together
with all amendments hereto.
2.17 Severance
Payment . “Severance Payment” shall mean the
payment of severance compensation as provided in Section 4
hereof.
2.18 Target
Annual Incentive . “Target Annual Incentive” shall
mean the target annual incentive payments received by the
Participant under the Company’s incentive cash bonus and
variable cash compensation programs (or any predecessor or
successor programs) as in effect on the date of the Termination
Event for the fiscal year in which the Termination Event occurs.
For purposes of calculating a Participant’s Target Annual
Incentive amount, the following rules shall apply:
(i) In the event a
Participant was not eligible to participate in such bonus and
variable compensation programs for the entire fiscal year, the
Target Annual Incentive shall be calculated based upon the
Participant’s actual period of eligibility; and
(ii) In the event
a Participant first became eligible to participate in such bonus
and variable compensation programs in the fiscal year in which the
Termination Event occurs, the Participant’s Target Annual
Incentive shall be based on his or her targeted bonus and variable
compensation amounts as in effect immediately prior to such
Termination Event.
2.19
Termination Event . “Termination Event” shall
mean (i) the termination of the Participant’s employment
by the Company involuntarily (within the meaning of Treas. Reg.
§ 1.409A-1(n)(1)) without Cause, not in connection with a
Change in Control or (ii) a Change in Control.
2.20 Tier I
Participant . “Tier I Participant” shall mean each
Employee designated as a Tier I Participant by the Board and who
signs and returns to the Company a Notice of Participation
indicating that such Employee is a Tier I Participant.
2.21 Tier II
Participant . “Tier II Participant” shall mean each
Employee with the title of Vice President who is not a Tier I
Participant and who signs and returns to the Company a Notice of
Participation indicating that such Employee is a Tier II
Participant.
3.1 Waiver
. As a condition of receiving any payments or benefits under this
Plan, an Employee must sign a general waiver and release in a form
satisfactory to the Company and
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— Columbia Sportswear Company Change in Control Severance
Plan
which becomes
effective no later than the date that is two and one-half (2
1 / 2
) months after the end of the
Company’s fiscal year containing the Participant’s
termination date.
3.2
Participation in Plan . Each Employee who is designated by
the Board as either a Tier I Participant or Tier II Participant and
who signs and returns to the Company a Notice of Participation
within the time set forth in such Notice shall be a Participant in
this Plan. A Participant shall cease to be a Participant in this
Plan (i) upon ceasing to be an Employee, or (ii) upon
receiving written notice from the Administrator prior to a
Termination Event that the Participant is no longer eligible to
participate in this Plan, unless in either case such Participant is
then entitled to benefits hereunder. A Participant entitled to
benefits hereunder shall remain a Participant in this Plan until
the full amount of the benefits has been delivered to the
Participant.
4.1 Termination
Without Cause, Not in Connection With a Change in Control . If
a Participant’s employment is terminated by the Company
involuntarily (within the meaning of Treas. Reg. §
1.409A-1(n)(1)) without Cause, not in connection with a Change in
Control, then, subject to Sections 3.1, 5 and 6 hereof, the
Participant shall be entitled to receive severance benefits as
follows:
(a)
Severance Pay . The Participant shall be entitled to receive
a cash payment equal to the following:
(i) Tier I
Participants shall receive a cash payment equal to one and one-half
(1.5) times the sum of the Tier I Participant’s Base Salary
plus the Tier I Participant’s Target Annual Incentive
amount.
(ii) Tier II
Participants shall receive a cash payment equal to the sum of the
Tier II Participant’s Base Salary plus the Tier II
Participant’s Target Annual Incentive amount.
EXAMPLE : Tier I Participant is terminated without Cause
as of July 1, 2008. Tier I Participant’s Base Salary for
2008 is $150,000. The Participant’s Target Annual Incentive
amount for the 2008 fiscal year is $10,000. The Participant is
entitled to a Severance Payment equal to 1.5 x ($150,000 + $10,000)
for a total Severance Payment equal to $240,000.
(b)
Employee Benefits . To the extent the Participant and the
Participant’s spouse and dependent children properly (and
timely) elect, pursuant to Code Section 4980B
(“COBRA”), continuation coverage under the
Company’s group health plans, the Company shall reimburse the
Participant for the proportionate cost of the premiums due for such
coverage, as determined by the cost ratio policy for the
Company’s employees in effect from time to time, for a period
beginning on the Participant’s termination date and ending on
the earliest to occur of (i) the date on which the Participant
is no longer entitled to COBRA continuation coverage under the
Company’s group health plans, and (ii) the expiration of
eighteen (18) months, in the case of Tier I Participants, or
twelve (12) months, in the case of Tier II Participants, from
the Participant’s termination date.
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— Columbia Sportswear Company Change in Control Severance
Plan
4.2 Termination
Within Twelve Months Following a Change in Control . If, within
twelve (12) months following a Change in Control, a
Participant’s employment is terminated by the Company
involuntarily (within the meaning of Treas. Reg. §
1.409A-1(n)(1)) without Cause or by the Participant for Good Reason
then, subject to Sections 3.1, 5 and 6 hereof, the Participant
shall be entitled to receive severance benefits as
follows:
(a)
Severance Pay . If the Participant is involuntarily
terminated by the Company without Cause or if the Participant
voluntarily terminates employment for Good Reason, the Participant
shall be entitled to receive a cash payment equal to the
following:
(i) Tier I
Participants shall receive a cash payment equal to two
(2) times the sum of the Tier I Participant’s Base
Salary plus the Tier I Participant’s Target Annual Incentive
amount.
(ii) Tier II
Participants shall receive a cash payment equal to one and a half
(1.5) times the sum of the Tier II Participant’s Base Salary
plus the Tier II Participant’s Target Annual Incentive
amount.
EXAMPLE : A Change in Control is consummated on
June 15, 2008. Participant is involuntarily terminated as of
August 1, 2008. Tier I Participant’s Base Salary for
2008 is $150,000. The Participant’s Target Annual Incentive
amount for the 2008 fiscal year is $10,000. The Participant is
entitled to a Severance Payment equal to 2 x ($150,000, + $10,000)
for a total Severance Payment equal to $320,000.
(b)
Employee Benefits . To the extent the Participant and the
Participant’s spouse and dependent children properly (and
timely) elect COBRA continuation coverage under the Company’s
group health plans, the Company shall reimburse the Participant for
the proportionate cost of the premiums due for such coverage, as
determined by the cost ratio policy for the Company’s
employees in effect from time to time, for a period beginning on
the Participant’s te
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